Despite being aware since early 2015 of security vulnerabilities in its 5 Card Cash game, the Connecticut Lottery Corp. didn’t discover actual fraud committed by retailers until six days before it suspended the game last Nov. 12.
That was the conclusion reached in an eight-page report from the Lottery’s Interim President and CEO Frank A. Farricker.
“The Lottery did not know that certain retailers were actually perpetrating this fraudulent scheme until Nov. 6,” Farricker wrote.
The report is addressed to the Connecticut Department of Consumer Protection, which began investigating the alleged fraud last November and has questioned the Lottery Corp. about its operation and suspension of the game. DCP Spokesperson Leslie O’Brien declined comment on the report Tuesday because the probe remains open.
There have been nine arrests in connection with the case, according to published reports.
The alleged fraud, known as “palming,” occurs when retailers take or “palm” a winning ticket and replace it with a non-winning ticket.
In January of 2015, Lottery officials and gaming vendor Scientific Games International Inc., first became aware of the potential risk to exploit the gaming system when an employee notified them that the screen displaying the past 25 wager transactions could be seen before the tickets were printed. The consensus then was that fraud was unlikely because the retailer probably could not review the screen that quickly before the tickets were printed, the report states.
Slowed printing of tickets next became an issue that attracted attention in the summer of 2015, but was not connected to any alleged fraud and wasn’t able to be fixed until that October. However, in mid-October 2015, Lottery special investigator Robert Balicki uncovered the manner in which slowed printing could affect the instant win game with palming, yet officials had no reason then to believe that any retailer was abusing the system, the report states.
Again in late October 2015, however, an unusually high number of prizes in the past quarter raised suspicions, but it was not until Nov. 4, 2015 that one retailer was reported with a stack of winning tickets after a terminal had been replaced. On Nov. 6, the Lottery investigator reported that he had uncovered “an improbably high series of 5 Card Cash tickets that were instant wins.” Then-President and CEO Anne Noble directed that action to be taken to confirm those suspicions and the game was suspended on Nov. 12, the report said. She stepped down from that post in late August.
The Lottery’s Board of Directors next meets on Nov. 17.
